Telecom Italia S.p.A.
Q4 2021 Earnings Call Transcript

Published: 3 Mar 2022

[Operator:]

Ladies and gentlemen. Good afternoon and welcome to Telecom Italia Full Year 2021 results and 2022/2024. Pietro L [Operator Instructions]

[Carola Bardelli:]

Ladies and gentlemen, good afternoon. A very warm welcome to our full-year 2021 results, and strategic brand presentation. I'm here with our CEO Pietro Labriola, our CFO, Adrian Calaza, and the management team. Pietro will take you through the whole presentation, while Adrian and the management team will be available to take your questions in the Q&A session. Pointing out to you, our safe harbor disclaimer on page one. Let me hand it over to Pietro. Pietro, the floor is yours.

[Pietro Labriola:]

Thank you, Carola. Good afternoon everyone. It's a great pleasure and an honor me to be here to present our results and plans. I have a lot to say, shed some light on the company I worked for over the last 20 years. And I'm now convinced requires both decisions to be taken to have a brighter future. We have identified a root for strong value creation but before talking about it, let's cover '21 results first. Let's go to Slide 5. 2021 was a very good year for Brazil on all fronts and we had several achievements in Italy as well. In a nutshell, we had a strong boost in client's perception of our superior quality. The launch of our tiered offer has set the premium price referenced in the market and confirmed TIM's positioning as the quality leader with a segmented approach. We'll go further down this route. Premium price and segmentation are key for us. This service for business are a great opportunity for TIM and this is already shown in the numbers

[Carola Bardelli:]

Operator, we are ready for the Q&A session. Thank you.

[Operator:]

Ladies and gentlemen, the Q&A session is now open. [Operator Instruction]. The first question comes from Mr. David Wright of Bank of America. Mr. Wright, please.

[David Wright:]

Thank you, Pietro, for giving us the presentation and the opportunity to ask. I guess just a couple for me. One is a little more technical, but just first of all on the NetCo that you've described, could you give us any indications of how you could look to bring that, if all of that asset, whether it would be like a BT open-reach or whether you could look to actually carve-out of the TI group. And there has been some reports of an MOU with Open Fiber that feels like the next progressive step. Can you give us any indication on discussions you may be having? And then my second question a little more technical on the [Indiscernible] share dividend, which I understand carries forward in the event of not being paid. If it's not paid the following year and there is reserves available to pay, does it carry preference? The roll forward, [Indiscernible] dividend over the current dividend, just trying to understand some of those dynamics. Thank you once again.

[Pietro Labriola:]

Hi, David. Thanks. Related to the first question that these NetCo, we have in mind a [Indiscernible] and not more than a lot of BT work. And I'll try to elaborate more on that. What we're thinking is that to separate completely the network could allow us to have the advantages on both sides. The first one [Indiscernible] on the NetCo network's side, and so also prices and on the retail one. I continue to remember that sometimes we forget that we've lost during the year, all the theoretical advantages coming from a vertical integration. We are the most regulated country. We still have a lot of [Indiscernible] to compete on the retail side face-to-face with the other player. So a complete separation, that carve-out could allow to have better competition play-field, both on the retail side and on the wholesale side. In the meantime, what we are expecting is that in any case, building a carve-out could allow us to have optionality toward a possible industrial partnership. We cannot tie that the potential partnership from industrial point-of-view, could be CDP with open fiber.Or to look for a full their financial partner that could allow us to distress the level of capex that are requested to proceed the move on all the development of FTTH. The result that we are facing in our number are related to [Indiscernible] in the next year will face a wave of capex that is particularly high. But if we look in the medium long-term, they will be reduced because once we have covered all the error that are planned, we'll not have the level of expenditure make to the FTTH. Let's remember also to clarify, what expecting is that in the medium long run, we can start where we also benefit coming from the decommissioning of the old technology and fixed [Indiscernible]. And in the case of a structural separation, all of the decommissioning process could be also facilitated by all the different steps. Related to the savings share, I need Adrian to answer.

[Adrian Calaza:]

Hi, David, how are you. Regarding the dividends for the savings shares, it's not a discretionary decision, it's a technical matter. Today, even if we have reserves, these reserves are blocked. And if we pay these dividends to the savings shares, we will need to pay taxes on those dividends. So that's the matter -- the reason why for us technically today, it's not possible. Going directly to your question, if these dividends are cumulative, yes they are for two years. So if in the future we'll go -- come back with or we have additional reserves in order to distribute it, we will pay definitely.

[David Wright:]

Okay. And just to double check, Pietro. Can you comment are there any discussions with Open Fiber on the way right now. And I guess just on the savings shares, if it's not paid this year and it can be paid next year, does this year get priority against the reserves versus next year. I hope I'm being clear with that. Thank you.

[Pietro Labriola:]

David, related to the first question, it's clear that we are looking around and we started to have some discussion -- initial discussion with possible partner, both on the industrial side that on the, let me say financial side. Then it's clear that is something that we must go more in depth in the following weeks. But what is important is that -- and perhaps it can anticipate it also other question that could arise during the call. Compared to the past that we stated that we are ready now to lose the vertical integration. This is something that during the last eight years because they're starting 2015 to start to discuss about the network separation was a taboo for our company. Now is the [Indiscernible] and putting it on the table that you are ready to lose the vertical integration. Adrian.

[Adrian Calaza:]

Yes, David. Regarding which has priority? I think it's indifferent. If we come back to have net -- positive net income, and we [Indiscernible] reserves, will be available to pay up to the reserves that we have, and this considering the level of each year.

[David Wright:]

Thank you for your answers, gents.

[Carola Bardelli:]

Thank you, David. And next question, please.

[Mathieu Robilliard:]

Good afternoon, all and thanks for taking the questions. If I can follow up on some of the previous questions on NetCo specifically. So when you talk about carving out NetCo against the structure within the holding company, which is the list of company with two separate entities, and my question would be, would you be ready in that scenario? I think you alluded to partners to join you in the wholesale NetCo business but are you willing or are you -- or would you accept to lose the majority in that NetCo? And that will be my first question. And then I saw that you're raising Capex, obviously investing in fiber, which is a great opportunity. But when we think about a potential combination with another partner which according to what you said today in any case, wouldn't take place between maybe -- before 12 or 18 months, isn't that step up in Capex something that reduces potential synergies if you were to merge with someone and maybe defeats a lot of the benefits of doing that merger? So that's -- sorry, that's the first question. The second one was on some of the write-downs you did. If I read correctly in the slides, you talked about something related to media. I suspect this has to do with the deal with [Indiscernible] and it seems that you're assuming that business is going to be negative or have a negative impact for the future or is that a reflection of the change of view about the past? And I guess the question is, are you assuming, when you write down the media, that you're not renegotiating for now the deal with [Indiscernible] and you've been prudent and could that change? Hopefully that's a clear question.

[Pietro Labriola:]

Thank you, Mathieu Robilliard. So as I stated in beginning, we're ready to lose the majority of NetCo, then the possible scenario that could allow us to reach that goal could be different. And we spent the last three months to go through the different situation that are mainly related who will be the partner with which we will proceed. We can have a demand, we can have a contribution. So based on the different situation, can change the way to proceed. Keep in mind that in any case, as we stated, we can also keep a minority stake, but in any case to be sure to have the -- to lose the vertical integration should be a stake that do not allow us to have veto power to contribute in discussion or to have the possibility to interfere with that. Keep in mind that in these NetCo, we should put all deals and business. So the ServiceCo would be mainly retailer. Related then to the -- you were asking something related to Fibercon combination, if I'm not wrong, yes?

[Adrian Calaza:]

That's right.

[Pietro Labriola:]

Let me check. The step-up in Capex about -- yes, the possible synergies that are coming ready to [Indiscernible]. If we proceed with an industrial partner, we have to keep in mind that we have three different kinds of synergy. The first one is Capex avoidance. And for sure, if we should proceed with CDP and Open Fiber, the time that will be spent through the eventual authorization by the antitrust, could it be at European level or at national level, could not allow to exploit all the Capex avoidance. But if you look at the number above company, looking at the public number, are thinking to continue to invest on [Indiscernible], so this is not the main issue. But again, we could lose a part of synergies arising from Capex avoidance. But then we have two full other level of synergies. The first one, I don't take to explain to you how this business is a business where it's really important the level, let me call that saturation, although it is not saturation. If we put the customer all on one network, the return on investment is for sure higher. If you put all the customers in one network, also the speed to reach the level of saturation is faster. Both of them are two elements that could allow to add further synergy, let's call it this way, coming from a better return on investment. Last but not least, there is a matter of speed and also concentration of the effort. Today, this is something that is well-known in Italia market. We are facing difficulties because while we believe that at the same times, in the same area, we are having some issue with the operational activity to look for companies that are able to build this network. So all-in-all, for sure based on the time that will be needed, if we will proceed with an industrial partner, the synergy that we will lose will be the part of peer that is necessary for the antitrust authorization. While, the other synergies will continue to exist. Related to the second question that is, on DAZN. Yes, what's happened is that we put in 2021 direct off of the negative impact of the DAZN. We didn't include any kind of further improvement that can arise from a renegotiation, or if we will do something different. And what will happen is that in the next year, we will walk on the media business that we have managed until today, because we are not completely satisfied by the way in which we are implementing this strategy. It's clear that they are not contributing in terms of EBITDA and value, as we were imagining, so we'll do all we can do to try to be back to have marginality also from this line of business.

[Mathieu Robilliard:]

Thank you very much, Pietro.

[Carola Bardelli:]

Thank you, Mathieu. So next question, please.

[Operator:]

Next question comes from Sam McHugh of Exane BNP Paribas. Mr. McHugh, please.

[Sam McHugh:]

I only have two questions, if I can. First on the fiber build, I think that your ton of the moment gets you to 60% coverage and obviously beyond that is Open Fiber. Can you give us first an indication of how your customer base retail and wholesale splits between the 60% where you will have coverage and then the 40% where you don't have a plan to rollout. Number one. And then the second question is, [Indiscernible] your balance sheet, is starting to look very stretched. There have been some reports in the press about KKR having a put option on the FiberCop stake. Can you confirm or deny whether that is true or not? Thanks very much.

[Pietro Labriola:]

About the first question that is related about liquidity different the well, your question we want to know about the coverage of the country are with distribution between our customer and the customer of the competition. Is it right? On the FTTH. Or we are talking about distribution between black area and wet area.

[Sam McHugh:]

Yes. It's a more and more I'm thinking if you can't do an Open Fiber deal, how much of your customer base fits in areas where you won't have the network and they would have the network. Just trying to size the downside risk if you start building at 60% of the country.

[Pietro Labriola:]

It is not really easy to do this comparison but let's work in this way. Let's remember that the country development [Indiscernible], black, gray and white. On the white area, Open Fiber is the concession, so they will be the FTTH network. They will be the only one that will be the FTTH network. But in this area, we've already developed our ATPC network, where we have more than 60%, 70% of our customer with ultra broadband. And in these area, 50% of our network is able to achieve something above 50% -- 50 megabits per second. Then we have the gray area on which none of the company for what they know, public information, have started to build in this area. And in this area, we have our FTTC coverage, where we are continuing to perform. Let's remember that we complete and increase the coverage with FTTC from 85% up to 90% during 2021. And then there are the black area in which, again, I don't -- I can talk only based on the public information I am able to gather, their Open Fiber is [Indiscernible] of team in terms of FTTH coverage. Then the second question was related to the Fibercon [Indiscernible]. You were asking if we have any specific [Indiscernible] option or other element? Yes?

[Sam McHugh:]

Correct. Let's just try to think about the balance sheet, and the risks that we see in other big cash outflows of KKR work advertiser per option on that bank account. Thanks.

[Pietro Labriola:]

It's clear that the contact that has happened in any kind of this contract, some rise in favor of the KKR. But at this stage, also for the confidentiality issue, we cannot disclose. So again, this is something that is normal, but to be clear, it doesn't put us in difficulties if we want to proceed with the carve-out.

[Sam McHugh:]

[Indiscernible]. Thank you very much.

[Carola Bardelli:]

Thank you, Sam. Next question, please.

[Operator:]

The next question comes from Jerry Dellis of Jefferies. Mr. Dellis, please.

[Jerry Dellis:]

Yes. Good afternoon. Thank you for taking my questions. First question might be a follow-up from the last one. I was just interested in whether you would imagine that FiberCop would continue to exist as an entity within NetCo; And what right KKR has about the way in which Fibercon might be folded into NetCo? And then secondly, a follow-up on the question regarding the [Indiscernible] dividend, if I may. If you are in a positive net profit position next year and even if you don't have positive distributable reserves, would you pay the 2021 [Indiscernible] dividend in preference over the 2022 dividend? Thank you.

[Pietro Labriola:]

So about the fifth question that -- where he's asking more details about our contact with Fibercon. Again, is up really any kind of these deal they have summarized [Indiscernible] low couple of five-year set, but it's clear that if we will proceed with any kind of activity we will be involved and discuss with them. Also, if I think that as I was telling you before, the rag that [Indiscernible] neutral, traditional, right. Let's remember in any case, when we discussed about the two possible different scenario, the so-called industrial one and the financial one. One we talked about the industrial one. Let's remember that independently from averaging, there are also some gold and power routes that put and give more right about the possibility to merge compared with the financial one. For the second question, Adrian.

[Adrian Calaza:]

Yes. On the preferred -- on the savings, clearly, if we have positive net income in the future. Of course, these preferred shares in order to a new dividends. Obviously, starting with the ones that were due to pay in 2022, but yes, definitely either net positive, net income we will restart to pay dividends on the preferred shares.

[Jerry Dellis:]

Thank you very much. Could I just ask what was the distributable reserves position at the end of 2021, please.

[Adrian Calaza:]

At the end of 2021, so before the shareholders meeting, the total reserves are €11 billion before the shareholders meeting. After the shareholders meeting, it will be €5 billion.

[Jerry Dellis:]

Thank you very much.

[Adrian Calaza:]

[Indiscernible]

[Pietro Labriola:]

Sorry, [Indiscernible]. Also just to be clear. For some questions, it's clear that we are not hiding anything. But you can imagine that we are in a situation for which the next three months will be very important for our company types of negotiation. On the table, we have several opportunities that we have to try to get. So some information can put someone in a better condition to negotiate. These reasons for which on some information, I will try to not give too many details.

[Jerry Dellis:]

Understood. Thank you very much.

[Carola Bardelli:]

Thank you Jerry, next question please.

[Operator:]

The next question comes from Mr. Luigi Minerva of HSBC. Mr. Minerva, please.

[Luigi Minerva:]

Yes. Good afternoon. Thanks for taking my two questions. The first one is on Slide 29. Pietro, I know -- it's about the rationale for the structural separation. Because if I look at that slide, it's very clear that you have countries like Spain, France, Germany, where regulatory benefits are there even in the absence of structural separation. So it is possible within the European regulatory framework to have a support on your regulation even when the incumbent remains vertically integrated. So what is special in the case of TI that you require structural separation in order to win regulatory relief? And the second question is just a clarification on the INWIT stake. I just found the press release not completely clear. So I just wanted to clarify if the Ardian offer is to buy TIM completely out of INWIT? Thank you.

[Pietro Labriola:]

Luigi, thank you. Related to the situation, keep in mind that this is something that we are discussing since 2013. What is happening and when it's understood that I'm becoming old because I started 2008 when we start with the equivalents of output. Then we move in 2013, 2014 with the equivalents of input. Then we started with the Fiber and we're obliged to be cost oriented on the Fiber. Then we created FiberCop, and we create FiberCop specific company. In the meantime we started to change all our system. What it means is that, today if I was in the shoes of other takeoff player around Europe, before to go towards the loss of the vertical integration, I should think several times because perhaps part of them continue to have equivalents of output, and they didn't spend money to put in play something as we did. They continue to have equivalent of input, and they didn't spend the money that we spend to do that. They continue sometimes also to not be, as in our case, obliged to do a comparison for the launch of the new offer based on the comparison with some other role. Let's imagine this way, we are, if we have the network and -- the separation of the network, theoretically, I should be the most efficient player because I have the highest amount of customer. I should buy from end-of - seller. I'm not discussing about -- to you about wholesale price or volume discount, but I should be the most efficient. I don't have to explain to you, Luigi, that this is a business of economy escape. Today, one, when I have to compare and build my retail offer, I'm compared not with the most efficient competitor -- with the less efficient. So we chart advantages to continue to be like that. Perhaps you don't know, but in Milan our market share is 23%. I'm not the first player. Why I have to compete without the possibility to compete exactly as other trends did? Let's remember, for example, that one of the main competitor in Milan was able to subsidize with content. The connectivity, we're not allowed to do that. So again, I understand if you think from another [Indiscernible] player point-of-view. But all the theoretical advantages were lost during the time. Deregulation is like that. So one of the last case you see the soccer bundle. We were entering in the business of DAZN and sport, because we think it is bundled and it was forbidden. So I will put in a different way the question, you no matter the mid-market, can you tell me not by claim, which are the advantages of the vertical integration? This is the question that you asked to some analysts in the one-to-one. And if we go out from claim, I didn't receive specific elements that justify something like that. And I spent the last three months explaining that also to our board of directors because they are doing their job. They are challenging us as a management team, not to buy something as a black box, but explain why that. So again, also when we talk about synergies and dis-synergies, we are also advisor of the committee adopt that are experts on this matter. And they told, there are dis - synergies from the IT side, then explained them that we already developed everything during this year. So why stay like that? Which are the advantages as a vertical integrated player? Sorry, if it was provocative, Luigi, but I did it just to make more clear my statement. But again, if there's something that they didn't explain well, please let me hear to come back to you.

[Luigi Minerva:]

Thank you, Pietro.

[Pietro Labriola:]

And about INWIT hardware?

[Luigi Minerva:]

Yes. Regarding your -- the question about the offer coming from Aldean at this offer is for big portion of the stake that we have still on Daphne 3, that is one of the controlling company have been with. Even though after the -- if we accept the software, we will remain with participation in Daphne and also with some governance INWIT the operational companies. So the offer is not for the stake on INWIT but the stake we have on Daphne 3.

[Adrian Calaza:]

Can I ask, what is the stake in Daphne 3, can we quantify?

[Luigi Minerva:]

Yes. It's for the 41% and we will remain with an additional 10% of Daphne 3.

[Adrian Calaza:]

Great. Thank you.

[Carola Bardelli:]

Thank you. Luigi. Our next questions, please.

[Operator:]

The next question comes from Mr. Domenico Ghilotti of Equita. Mr. Ghilotti, please.

[Domenico Ghilotti:]

Good afternoon. I have a couple of questions focusing on the 2022 outlook in particular for the domestic business. So if I'm not wrong, you are projecting something like mid-single digit declining sales, and mid-to-high teens declining EBITDA with costs that are actually up. Could you give us some more color in understanding the bridge on why the domestic business despite the KPIs that you were commenting before that were not so bad is so under pressure in 2022. And in terms of second question still on 2022 guidance. I presume that we should expect some negative equity free cash flow, and I reached something like €20 billion of debt after leases even including the [Indiscernible]. I wanted to check if this calculation are reasonable.

[Pietro Labriola:]

Let's start from domestic for 2022, and let's try to bridge the relationship between 2021 and 2022. What is important is that -- and let's discuss about EBITDA first of all, and then we can move also to the revenue. About EBITDA, what was happening is that on the domestic level of the 4.358 billion euro, in terms of EBITDA after lease, were part of them that are related on non-repeatable activity that are related as we mentioned also on some [Indiscernible] activity that it's very difficult to foresee that can be -- or we can have further opportunities like that during 2022. Then if you get the exits paid of the fourth -- sorry. There's another impact that is related to the fact that the 24 or the 26 of December change also, the communication code that oblige just to change the way we should approach the business of the ultra broadband. I don't remember, if you have the mind, our talk with the frontload of the revenues to the activation. [Indiscernible] one shot price. And then if you get the last quarter, the fourth quarter exits paid in terms of customer base and then multiplied by four, you mainly arrive to the number that we put in our plan. It means that we have some challenges because we are taking the commitment that we will stay as we are for the organic business because again, if you reduce by the headwind, as we called that in the chart 40, that are not repeatable and then you get the fourth quarter and you multiply by four, it means that we have a talk with Andrea and the rest of the team to keep the level of EBITDA also working on the cost side while we are moving towards an important transformation project for cost-cutting to keep that. I don't know if I was clear about the number but if you need more details, there's no problem. There was also a second question.

[Domenico Ghilotti:]

Okay. Yes, on the free cash flow and level of debt.

[Pietro Labriola:]

Yes.

[Adrian Calaza:]

Considering what we've been seeing in the different answers and what you have in the presentation. We have confidence of factors -- of [Indiscernible] factors. I want the negative because we see that some of them are really positive. On 2022, we will have the payment of the licenses here in Italy, we will have the payment of the 5G frequencies. In Brazil, we will have probably the biggest effect that is the payment of the participation in Oi in Brazil; and we will have additional cash effects up to the deferred tax and the payment on this also. You can imagine that it's difficult to assume that the evolution of the net financial position won't be negative. Then in terms of equity free cash flow, as we mentioned before, we're not guiding it because there are a lot of [Indiscernible] parts. We are trying to understand better some of these effects. Of course, we have our numbers internally, but we're trying to understand if we can improve them with some actions, for example, the INWIT deal that we're discussing before. So again, at 2022 we will have accomplish of different and several factors all aligned on the negative side in terms of financials, but probably on the positive side in terms of operation.

[Pietro Labriola:]

[Indiscernible]. I don't like to seem impolite. And what is important that none of the team that is here in the room with me is [Indiscernible] of this number to be clear. We work on a realistic plan, and we'll do whatever we can do to improve these numbers. But we told that be realistic and try to gain the trust of the financial market was much more important than sell a dream that can then become a nightmare. So we see room for possible upside. As others mentioned, we will work on that. We will update you on a quarterly basis on the traditional business, on its [Indiscernible], on the day-by-day activity, while we will walk to arrive by the date of the [Indiscernible] results with our plan that could try to better valorize the assets of this company that are really good. And I'm quite optimistic about the possibility to improve these numbers.

[Domenico Ghilotti:]

Okay, thanks. And do you confirm that the Recovery -- the opportunity of the Recovery Fund have not been factoring, including the strategic poles or strategic app.

[Pietro Labriola:]

Yes. Thank you for your question.

[Adrian Calaza:]

Sorry. Yes, clearly they're -- these are not factories, example, INWIT.

[Domenico Ghilotti:]

Okay. Thank you.

[Carola Bardelli:]

Thank you, Domenico, so we now have time for the last question, so Operator last question please.

[Operator:]

The last question comes from Mr. Keval Khiroya of Deutsche Bank. Mr. Khiroya, please.

[Keval Khiroya:]

Thank you. Two questions, and thanks for taking the questions. As the first one was, I appreciate in Q4, there's a lot happening about the Retail Propane answer negative. How are you thinking about that? How that subscriber momentum evolves in 2022? And then secondly, I appreciate this is more a question for your board, but you highlighted the interest of private money on infrastructure that given the extensive turnaround on a short time horizon, public markets. Do you think it's right for TI to be listed company all in current times? Thank you.

[Pietro Labriola:]

So about the [Indiscernible] on ultra broadband, what we are thinking to do is that during 2022, to try to be a player that will try to please the market and reduce the competition on price. We are working with Andrea in the possibility to segment in a better way our offering; not only in ultra broadband but also in the mobile. Because sometimes in Italy, the price are so low that we have room to do and giving more value to increase the ARPU. So from a certain point of view, we think that makes no sense to fight, to increase the quantities, diluting the ARPU. It doesn't mean that we're not work to improve our [Indiscernible], but you have to start to think that we are the only country where FTTH has the same price of FTTC. And easier when which you have destroying value. This is one of the only country where sometimes the main player created a second brand to compete with the new entrants. Either in the case, reducing the price, we have to work in terms of create offer to increase the quality of the service and to improve the ARPU. If you look at our price, we think that we have margin not for a so-called price up, but to create further offer that could allow to increase the level of ARPU adding service on what will sell us today. Then we have to find those a different way to accelerate those the migration towards THE ultra broadband for PSTN and traditional ADSL. What we did until today is to get the low [Indiscernible], why that? Because the [Indiscernible] that were easy to do. Now, for example, so when we have the possibility to use the best technology available offered. The issue is to convince customer to open their door and to allow us to meet with them at the same price towards the ultra broadband. This is something that we work on because customer experience and digitalization, are also too important elements we have to look to. Can you repeat then the second question because I was unable to catch all just a second. The possibility to team to be the listed. I think that there are some different way to reach the similar again. And this is something that I think some mean it's to explain, which is our [Indiscernible] If you look at TIM, as is today. In, at the same time, we're managing four business model that are completely different. We have Brasil that is, let me say that we saw the Azure, a wonderful country is happening exactly the country of what's happened in Europe. We had an auction for the 5G that was clever. They put the value of the auction in network building. So don't pay a [Indiscernible] The market is going from five to three player. Exactly the commentary of what's happened in Europe. We both, the third, fourth player and we will create that for the next year but by the end of 2024, they will be back to leverage one. And then it's a market with the growth. So what we cannot do is block Brasil from growth because it will be a grow and gene for our group in the middle long term. Then we have the enterprise business. And I tell you story, when I was younger, at the beginning of 2000, consumer was the best war. We were discussing about the huge opportunity coming from content, financial services, technology evolution. And it was the story that happened in the last 20 years. Now, the consumer is a segment where the competition put the price at the lowest level and it's difficult to our services to improve. So the consumer is a story of restructuring the company and re-position the offset. In the enterprise segment, we have the opportunity for the next six or eight year to follow the wave of the modernization of the public administration and of the above large corporation. We're discussing about cloudification, cyber security, IoT, huge opportunities in a market, in the segment where the average length of a contract is above three years and if we apply the Pareto law to our revenues, 80% of our revenues are coming from customer with contract above five years. What's happened next was to invest in the Cloud or to invest on some contracts. And so we have to find a way to finance these kind of activities. Last but not least least, you have the network. Once you look at the network, it asks for a huge amount of Capex because you have to build a network today. And what [Indiscernible] is saying is that, if this company was in utilities, the market could ask us, why you're not putting much Capex to build these infrastructure? Because in the medium long term, it will be a cash cow. But being a Telco player is more difficult. But to come to your question, perhaps sometimes it's better to keep private the network, because the private allowed to have access to an interest rate much better, in the short term, less constraints in terms of rating and financial issue. So if we want to discuss in theory if it is better to take private your group or to pick private -- from private some piece of the company. Perhaps you have to look at the network as the piece on which take private could allow to explore better the efficiency and the opportunity that will come. Again, sorry, if I took the last minute to do a long story short, but I think that it will allow. And again, I can't speak in the name of the management team that is here on this table, we will walk in the next week and month because we would like to improve this number. We are not happy about that. We think that we have the opportunity to do something better of what we have presented. But I don't want to miss the opportunity to ask you to be ready for our Investor Day, that we led by the presentation of the second half -- of the first half, sorry. And also to try to buy further time. And I'm sure that we'll show you a condition and a situation that it's much better than the one that we have today. Thank you.

[Carola Bardelli:]

Thank you very much. From my side as well. And from the whole team. We're available as usual for your questions in the afternoon and in the following day. Thank you. Bye.

[Operator:]

Ladies and gentlemen. The conference is over. Thank you for calling.